2015-12-12T08:00:10+00:00December 12

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In October Amazon announced it would begin offering Prime members in 16 different metro areas the opportunity to get same-day delivery. What’s more, is they also launched Prime Now, which guarantees delivery on a small selection of items within one to two hours.

This development raises an important question: What do these extremely expedited shipping options mean for the eCommerce industry–and how can Amazon’s competitors prepare?

Let’s begin by looking at the specifics of the program to get a better idea of what all it entails.

Amazon Same-Day Delivery: The Details

Here’s what Amazon Same-Day Delivery looks like: For orders over $35, Prime membership holders can order from a selection of more than 1 million eligible items (like household products, grocery items, and electronics) and get guaranteed delivery by 9:00 p.m–for free–seven days a week. For orders under $35, members can pay $5.99 for the service, while non-members pay $9.98.

Current cities being offered same-day delivery include:

Seattle

San Francisco

Los Angeles

San Diego

Phoenix

Dallas/Ft. Worth

Indianapolis

Chicago

Baltimore

Washington D.C.

Tampa Bay

Orlando

Atlanta

New York City

Philadelphia

Boston

For those who need even faster shipping, Prime Now goes a step above. Using the Prime Now app, members can order more than 25,000 eligible items (as well as food from area restaurants) and get free delivery within one to two hours.

To encourage members to take advantage of the new service, Amazon is offering multiple promotions around the service, including $20 off a $50 purchase. Plus, both same-day delivery and Prime offer additional features, like allowing the member to track their couriers and see how far away their order is at any given time.

Sounds pretty great, right? For Amazon Prime members (who pay $99/year for membership), this is just another item on the list of perks the program provides.

Amazon Prime member Rebecca Martin from Dallas, Texas is a big fan. She said,

“Amazon Prime same-day shipping spoils me rotten! I am happy to pay a little more at Amazon if it means I get my stuff fast. Period. I use Amazon Prime Now as well. The selection is geared to replenish basic needs; household items etc., but I’m sure it will grow in the future.”

However, Amazon isn’t the only company testing same-day delivery.

Other Competitors Testing Same-Day Delivery

Etsy recently launched EtsyASAP, which allows its eCommerce vendors in New York City to offer same-day (or next day, after 7 p.m.) delivery to customers, thanks to an integration with the Postmates API. For a flat $20 fee, customers can choose from more than 5,000 eligible products (which is only 0.016% of Etsy’s 32M products.)

Then there’s UberRush and its partnerships with eCommerce platforms like Shopify, BigCommerce, and Delivery.com. In New York, Chicago, and San Francisco, customers that make qualifying purchases and opt for the same-day delivery can expect to see an Uber driver deliver their items by end of day.

Google Express is also offering same-day delivery service for stores like Target and Costco within eligible cities, and is promoting the endeavour with a three month free trial for new customers.

It’s safe to say that Amazon’s competitors are taking note and testing their own abilities to deliver (literally) at the same pace. In turn, customer expectations are rising.

Ray Hennessey, Editorial Director for Entrepreneur Magazine said, “People expect convenience, and eCommerce companies have been following Amazon’s lead for 20 years now. If Prime offers same day, everyone is going to need to offer same-day, or miss getting the sale.”

Is that the case?

Impacts on eCommerce

You are probably wondering, “What will the impact of same-day delivery be on my eCommerce business?”

What’s interesting is new data from L2, which studied omnichannel retail data. The study found that free shipping was still more favorable than fast delivery. 68% of customers preferred free shipping, while only 32% felt that fast shipping was more important.

The study also noted that 78%–more than two thirds–most frequently opted for the cheapest (or free, when available) shipping option at checkout.

But it’s not just shipping cost and time that buyers look to when making an online purchase. Buyer experience and product variety are major factors as well.

Amazon struggles to provide a niche, high-touch experience for the buyer, as it provides such a vast array of products on a massive scale. Emma Siemasko, an Amazon Prime member, illustrated how the mass-market approach ultimately negatively impacted a purchase she made:

“Last year, when I was going on a snowboarding trip, I needed mittens. The mittens I wanted were sold on Amazon, but they were also sold on Backcountry.com for a similar price (within $5). But I was unsure of my size, and I really needed the gloves to be warm, so I wanted to talk to an expert about it. Backcountry had a chat feature, and I was able to talk with a rep about the different mitten options and how warm they would be. So it ended up being a no brainer to order from there, and now I always go to them when i’m looking for outdoor gear.”

Other consumers commented on how Amazon didn’t always supply the brand names or specialty products they were looking for, either. Jesse Bouman said:

“I buy things that can be commoditized on Amazon when I’m just looking for price. But I go to specific brands for things like clothes. I’m willing to wait 2-3 days for the brands I love.”

For these two consumers, customer experience has won out.

There’s also the limitations imposed by location to consider, too. Many same-day delivery services are only logistically feasible within metro areas, which, within the U.S., means excluding about 20% of the population that lives in non-urban areas.

Logistically, same-day delivery still has some major hurdles to overcome–especially when you consider the complexities that arise from working with external courier services like Uber (which is facing more than 178 total lawsuits within the U.S. this year.)

Ways Other eCommerce Businesses Can Compete

While every eCommerce business may not quite be ready or able to offer same-day delivery, there are definitely other ways they can compete for buyers’ attention–especially during the holiday shopping season.

1. Offer Free Shipping

As mentioned earlier, free shipping is still highly sought-out by customers. The Visual Website Optimizer 2014 survey on eCommerce found that as many as 28% of customers will abandon their carts due to shipping costs–making it the highest source of cart abandonment. Offering free shipping gives buyers one less reason to walk away.

2. Create Stellar Packaging

While companies like Amazon are focused on getting packages out the door, you can focus on creating an interesting “unboxing” experience for the customer through thoughtful packaging and unique personal touches. Something as small as including a handwritten thank you note can make your customers feel special, making them happy to make a return purchase.

3. Be as Prompt as Possible

Even if you’re not providing same-day shipping, strive to ship orders as quickly and efficiently as possible so there aren’t any unnecessary lag times that make your customers wait. If you’re using a shipping service like UPS, you can schedule home pick-ups so you never have to wait in line or drive your items to a drop-off location.

4. Provide Amazing Customer Experience

Customers want a great experience. By having a great online site and excellent customer service you can differentiate yourself.

One of the things that can be frustrating about Amazon customer service and returns is that it’s an automated process, during which you’re required to electronically submit information and wait to hear back. In comparison, non-Amazon retailers have the ability to provide quick, personable customer service in which the customer gets to speak with a real human right away–by phone, chat features, or via a direct email address that quickly gets a response back to customers.

5. Specialize

Amazon does have an incredible selection of items, but what it often lacks are the specialized or brand-name items that customers look for when making a purchase. Going beyond the typical offerings within your niche to provide a selection of more novel items is a simple way to get a competitive leg up.

6. Provide Extra Value

Along with your products, you can create a valuable add-on for buyers by throwing in extras with a purchase–like information products. For example, Ross Simmonds suggested pairing a yoga mat with a six-week training course, so that buyers feel like they’re getting more value from their purchases. Tying together service or information-based items with your physical goods makes the buying experience that much more rewarding for the customer.

In Conclusion

Since many of the programs like Amazon’s same-day delivery are still in their very stages, it’s hard to say if this highly expedited shipping will become the norm.

As the holiday season draws to a close in 2015, it will be interesting to see how many last-minute shoppers take advantage of these services. But for those who don’t offer the speedy delivery, it seems there are still many ways they can compete. Not time to start panicking yet!